MONTREAL — After a tough 2024 that saw profits drop 21 per cent, the head of Canadian National Railway Co. said the new year is looking brighter — even if U.S. President Donald Trump follows through on his tariff threat.
"While there may be some impact, it won't be so significant or prolonged as to cause a recession in Canada or significant inflationary impacts in the U.S.," CEO Tracy Robinson said on Thursday.
"We are assuming a modest lift in the economy."
That forecast reflects an optimistic view. On Wednesday, the Bank of Canada projected that 25 per cent tariffs across the board by the U.S. could bring on a recession and boost inflation within the first year of a trade war.
That would also be a harsh followup to a bumpy year for CN.
The country's largest railway saw fourth-quarter profits fall by nearly half year over year amid lower volumes across virtually all freight segments.
The three-month period saw work stoppages in November at the three largest ports in Canada — Vancouver, Montreal and Prince Rupert, B.C. — that halted container traffic. A long stretch of cold weather struck in December, slowing train speeds.
"Winter came early," said chief field operating officer Derek Taylor.
The disruptions also followed a devastating July wildfire in Jasper, Alta.— CN's busiest corridor runs through the mountain town — and a massive work stoppage by workers at CN and rival Canadian Pacific Kansas City Ltd. in August.
"2024 was a hell of a year," Robinson said. "We are happy to have it behind us.
"We didn’t deliver growth to the bottom line. We’re not happy with that," she added.
Revenues from container shipments — CN's biggest segment annually — sagged eight per cent year-over-year last quarter due to the disruptions as well as lower consumer demand. But proceeds from its two other big categories — grain and fertilizers along with petroleum and chemicals — increased four per cent and one per cent, respectively.
The railroad operator notched a record year for grain volumes due largely to big wheat and canola hauls.
The company predicted a bounceback this year in areas ranging from containers to chemicals and plastics.
"The big question is the tariffs," Jeff Windau, an analyst at Edward Jones, said in an interview.
“That’s the key item which is going to drive 2025 results," he said. "Volume is the key for them, and depending on whether tariffs are implemented and by how much, their volumes could see a hit."
Windau added that CN expectations of solid growth in the coming year were "reasonable," but stressed that crucial factors remain unknown.
On Thursday, the company forecasted growth in adjusted diluted earnings per share of between 10 and 15 per cent for 2025 alongside $3.4 billion of capital investment. It also announced a five per cent dividend increase.
"With the bar now reset after a difficult 2024, much hinges on hitting the new targets provided. Key is that we believe management has the right operating team in place to achieve just that," said RBC Dominion Securities analyst Walter Spracklin.
Net income for the three months ended Dec. 31 dropped 46 per cent to $1.15 billion, down from $2.13 billion in the same period the year before, CN reported.
Fourth-quarter revenue dipped three per cent to $4.36 billion from $4.47 billion a year earlier, the Montreal-based company said.
On an adjusted basis, diluted earnings per share decreased 10 per cent to $1.82 from $2.02 per share, below analysts' expectations of $1.96 per share, according to financial markets data firm Refinitiv.
This report by The Canadian Press was first published Jan. 30, 2025.
Companies in this story: (TSX:CNR)
Christopher Reynolds, The Canadian Press